SALT cap repeal

[PenelopeWitherspoon 19093]

Corporate tax cuts should be a healthy debate of paying their fair share vs driving jobs and funds overseas for lower taxes. Agreed. 
 
Leaving the SALT tax cap in place does not require the local governments to lower their taxes, as it does not effect 81% of the population. It is also only 4 years old, and while I agree and understand your point about local services, what was preventing these tax raises for services during the decades preceding the 2016 tax cap?  
 
What percentages of these “small cities” population would even qualify for the cap?  5%?  1%. We know wealth is conglomerated in major population zones. The cities can raise taxes and still not have the overwhelming majority of their citizens reach the cap floor. 

You don’t live in a place that has had skyrocketing property values have you?

[PenelopeWitherspoon 19093]

Also, just to put to perspective, my effective tax rate, thanks to Trump tax cuts, is higher than most major banks here in NYC. How is it fucking fair that I pay a larger percent of what I bust my ass to male compared to JP Morgan and Citigroup?

[David Dennison 18658]

20 hours ago, Brisketexan said:

Meh.  Trying to write rules on that would be next to impossible.  I'd be happy with one simple rule: you can't spend federal dollars on any business or property you have any interest in.

If the POTUS has a second home in Crawford, or Boise, or Aspen, or wherever, and he wants to work from there, let him.  And pay the security tab for having Secret Service snipers on the road in.  But we digress.

Going down the "waste, fraud, and abuse" road is a pretty pointless exercise.  On a federal level, the big-ticket items are defense, medicare/medicaid, and SS:

We need SS reform (raise the caps -- yes, I personally would pay more), means-test at least the timing of SS payments out, etc.

We need to fix our approach to healthcare (we spend a shitload of money as a country -- not tax dollars, personal dollars -- for mediocre results).

And we don't need as many next-gen fighter planes.  And I LOVE cool fighter planes.

But the real point here is that the meat-and-potatoes benefits to the people on an every day basis happen at the state and local level (e.g., your schools, etc.).  So we should free up those dollars.

There should be no cap at all on income subject to FICA for Social Security.

[PenelopeWitherspoon 19093]

There should be no cap at all on income subject to FICA for Social Security.

Unless they make social security income no taxable again for everyone, then I disagree. I’d be ok with no limit if as was deductible when paid, and taxed when received. Or, since that would be hard to switch to, not deductible when paid, but not taxed when received. Remember, the tax on SS income was supposed to be temporary. It’s not be repealed. So until they fix it, keep the fucking cap.

[David Dennison 18658]

1 minute ago, PenelopeWitherspoon said:

Unless they make social security income no taxable again for everyone, then I disagree. I’d be ok with no limit if as was deductible when paid, and taxed when received. Or, since that would be hard to switch to, not deductible when paid, but not taxed when received. Remember, the tax on SS income was supposed to be temporary. It’s not be repealed. So until they fix it, keep the fucking cap.

Everyone's full income should be subject to FICA. 

[FondrenRoad 4378]

24 minutes ago, ChickenSandwich said:

Corporate tax cuts should be a healthy debate of paying their fair share vs driving jobs and funds overseas for lower taxes. Agreed. 
 

Leaving the SALT tax cap in place does not require the local governments to lower their taxes, as it does not effect 81% of the population. It is also only 4 years old, and while I agree and understand your point about local services, what was preventing these tax raises for services during the decades preceding the 2016 tax cap?  
 

What percentages of these “small cities” population would even qualify for the cap?  5%?  1%. We know wealth is conglomerated in major population zones. The cities can raise taxes and still not have the overwhelming majority of their citizens reach the cap floor. 

Low corporate taxes encourage profit extraction rather than reinvestment. Business expenses are deductible.  The tax rate is largely irrelevant when deciding to hire someone new. However, a higher rate will have accountants figuring out how to keep more money in the business.  And much of that will cause legitimate growth rather than buying a portrait of the company President for the Mar a Lago bathroom. 

The pass through 20% deduction is even worse for job growth. And that is also exacerbated by the fact that most business owners probably didn't expect the gravy to flow forever so chose extraction and leanness over hiring. 

I'm all about everyone paying their fair share of taxes. What needs to be overhauled is the top down (fed to local) tax structure. It needs to be local to fed.  Taxes from wealthier areas can and should cover the shortfall in poorer areas. However, this redistribution should cover the services that local taxes normally provide. It should not cover foreign wars and/or things that provide zero benefit to these poorer areas.  

But the larger problem is that the GOP simply isn't a good steward of the government when it has power. It is entirely anti-government. So how and why should taxpayers fund an anti-government government?  Look, I support most of AOC's platform. I voted for her. But at the end of the day, we are going to throw more money in a federal black hole while our local infrastructure crumbles because she doesn't have the power to implement anything at all on a national scale. Nobody does. So we will just be increasing our military funding and corporate handouts while our small cities still die and bridges collapse in our large cities. And this is what you seem to support. 

Overall, the problem is that we aren't really a nation now. We are a grouping of independent states that pays a significant tithe to a king.  Maybe we never were really a nation, but we at least had government that tried to make us one. 

Edited January 30, 2021 by FondrenRoad

[David Dennison 18658]

5 minutes ago, FondrenRoad said:

Low corporate taxes encourage profit extraction rather than reinvestment. Business expenses are deductible.  The tax rate is largely irrelevant when deciding to hire someone new. However, a higher rate will have accountants figuring out how to keep more money in the business.  And much of that will cause legitimate growth rather than buying a portrait of the company President for the Mar a Lago bathroom. 

The pass through 20% deduction is even worse for job growth. And that is also exacerbated by the fact that most business owners probably didn't expect the gravy to flow forever so chose extraction and leanness over hiring. 

I'm all about everyone paying their fair share of taxes. What needs to be overhauled is the top down (fed to local) tax structure. It needs to be local to fed.  Taxes from wealthier areas can and should cover the shortfall in poorer areas. However, this redistribution should cover the services that local taxes normally provide. It should not cover foreign wars and/or things that provide zero benefit to these poorer areas.  

But the larger problem is that the GOP simply isn't a good steward of the government when it has power. It is entirely anti-government. So how and why should taxpayers fund an anti-government government?  Look, I support most of AOC's platform. I voted for her. But at the end of the day, we are going to throw more money in a federal black hole while our local infrastructure crumbles because she doesn't have the power to implement anything at all on a national scale. Nobody does. So we will just be increasing our military funding and corporate handouts while our small cities still die and bridges collapse in our large cities. And this is what you seem to support. 

It helps if federal dollars can avoid recalcitrant state houses. 

[FondrenRoad 4378]

12 minutes ago, David Dennison said:

It helps if federal dollars can avoid recalcitrant state houses. 

You have to also avoid the recalcitrant federal government. If my goal is to forcibly make wealthy Americans in wealthy states provide services for impoverished Americans in other states, federal taxes is the worst way to get the money there.  Less than a fraction of a penny on each federal tax dollar makes its way there. 

One can say the GOP got their wish when it comes to national governance. They made the government shitty so they can say "we were right, look how shitty it is."  You can say the GOP sucks for doing that and be 100% right, but that doesn't change the fact that the federal government is shitty and will likely continue to be shitty as long as the Senate is structured for minority rule.

High wealth states would be better off forming an NGO or multi state authority that distributes excess tax revenue to poor state residents and bypass the federal government entirely. 

Edited January 30, 2021 by FondrenRoad

[FondrenRoad 4378]

30 minutes ago, David Dennison said:

Everyone's full income should be subject to FICA. 

Agree. This is pretty much the only tax the federal government does right. Clearly delineated taxes work. They still managed to thieve some of it away for other bullshit even with that though. 

But also agree with Penelope. All money paid to FICA should be deductible from income for general FIT purposes. 

Edited January 30, 2021 by FondrenRoad

[Brew 3047]

Are you also planning on taking the cap off of social security payout calculations at retirement? That’s a pretty steep tax increase for those of us that are self-employed over the current cap. I would prefer they limit drawing social security for those over a certain amount of income in retirement rather than increase the base for taxation.

Federal taxation should be a means to draw income for funding the federal government, not push policy initiatives like home ownership or personal decisions like having kids, where you live, etc. The whole thing is a convoluted mess and that’s not an R or D problem. They have both made a disaster out of it. However, it helps my income so keep on complicating it. I’ll be fine.

[PenelopeWitherspoon 19093]

2 hours ago, David Dennison said:

Everyone's full income should be subject to FICA. 

Good luck with that one.  Not saying I do not agree, but yeah.

Also, I would disagree that retirement income (i.e. the proceeds from a 401K which is retirement investing) should be subject to that tax.  Generally, when one is withdrawing that, they are receiving social security as well. I would not be in supprt of paying SS on 401k distributions.

But forcing billionaires to pay SS tax on their capital gains taxes, yeah, they should.

Edited January 30, 2021 by PenelopeWitherspoon

[Judge Roybeanbag 11810]

Bottom line is we need to take the short term finger in the ass, and start taxing capital gains as income and raise the top rate to Eisenhower levels.  Move to 6 month reporting rather than quarterly, and incentivize long term corporate health.   I realize this is impossible but technology has fucked the market and we need to fuck it back.

[Brisketexan 104622]

Bottom line is we need to take the short term finger in the ass, and start taxing capital gains as income and raise the top rate to Eisenhower levels.  Move to 6 month reporting rather than quarterly, and incentivize long term corporate health.   I realize this is impossible but technology has fucked the market and we need to fuck it back.

A whole bunch of this. The perverse performance incentives in place that put quarterly numbers 10,000 miles above long term strategic planning, strength, and measured growth, has had horrific effects.

The stock market is not the economy. And if it is....your economy is fucking warped.

[Wanker Bob 379]

I'm about as ignorant on tax code as just about anything. Since the culture of America as already set up for excess and spending what's the reason why abolishing federal income taxes and instituting a federal sales tax wouldn't work? Seems it would be cleaner and the IRS can turn away from hounding regular citizens and turn to focusing on corporations and business paying correctly the tax they collect from pass through cost. That said I'm sure there's something I'm not considering 

[TwiceHorn 31280]

33 minutes ago, Wanker Bob said:

I'm about as ignorant on tax code as just about anything. Since the culture of America as already set up for excess and spending what's the reason why abolishing federal income taxes and instituting a federal sales tax wouldn't work? Seems it would be cleaner and the IRS can turn away from hounding regular citizens and turn to focusing on corporations and business paying correctly the tax they collect from pass through cost. That said I'm sure there's something I'm not considering 

The objection to that is that sales taxes are pretty hideously regressive.

[FondrenRoad 4378]

55 minutes ago, Judge Roybeanbag said:

Bottom line is we need to take the short term finger in the ass, and start taxing capital gains as income and raise the top rate to Eisenhower levels.  Move to 6 month reporting rather than quarterly, and incentivize long term corporate health.   I realize this is impossible but technology has fucked the market and we need to fuck it back.

Wait, is a finger in the ass a bad thing?

[Judge Roybeanbag 11810]

5 minutes ago, FondrenRoad said:

Wait, is a finger in the ass a bad thing?

Depends...

[Dahobbs 17447]

14 hours ago, Brew said:

As far as the SALT deduction, I’m not sure why any of it is deductible. Kill mortgage interest and SALT both, neither should impact federal taxes. If you pay $50k in combined state tax / interest and I pay $20k, why should that matter to the IRS. 

Failing to account for other taxes results in a theoretically broken system. An individual could have tax liability in excess of their total income/assets. Allowing  deduction of the two primary ways states/local jurisdictions collect taxes is a shield against that outcome. 

2 hours ago, Brew said:

Federal taxation should be a means to draw income for funding the federal government, not push policy initiatives like home ownership or personal decisions like having kids, where you live, etc. The whole thing is a convoluted mess and that’s not an R or D problem. They have both made a disaster out of it. However, it helps my income so keep on complicating it. I’ll be fine.

I go back and forth on this. On the one hand, I agree the system would be substantially simpler if it were only a fund raising mechanism and not a system of incentives to control individual behavior. On the other hand, tax incentives are one of the best ways the government can direct society's investment into perceived goods without having to create the administrative excess needed to directly make such investments. Basically, it is a way to efficiently direct societal resources to perceived goods (or away from perceived evils). Otherwise, the government would need to create either an administrative body to distribute funds or a regulatory body to create and enforce regulations. 

Edited January 30, 2021 by Dahobbs

[Brew 3047]

28 minutes ago, Dahobbs said:

Failing to account for other taxes results in a theoretically broken system. An individual could have tax liability in excess of their total income/assets. Allowing  deduction of the two primary ways states/local jurisdictions collect taxes is a shield against that outcome.

I get that principle, I just don’t see where it matters federally. They are an independent taxing body that has to raise funds for federal initiatives in theory. Should you pay less federally on the same dollars because you live in a higher tax state? I’m not sure that makes sense although it could probably be supported by unequal federal subsidies to state. 

Really what they should do is cap SALT at a percentage of taxable income. You could cap it at something like 8-10% of income and limit those that make lifestyle choices that that generate a higher than normal property tax. 

They should also just cut the standard deduction completely and roll back rates slightly to offset. Throw in a capped rent deduction if you want home expenses equalized.

[lemonlime 5503]

On 1/30/2021 at 11:13 AM, FondrenRoad said:

The low hanging fruit you are missing is repealing the corporate tax cuts that were part of the same bill and larger than the personal income tax cuts.

We are lucky that Trump didn't get that 2020 payroll tax IOU bill he wanted. That would have been a far bigger clusterfuck to undo. 

The thing about asking to cut local taxes is that local taxes actually pay for things. Federal taxes don't. Property values are high in Manhattan due to high demand. Demand is high because the city usually has adequate funding for services, police, schools, transit, and other infrastructure. Part of maintaining a safe desirable place also includes keeping poor people sheltered and fed.  All these things have costs. The federal government takes more money than state and local government and provides wars that nobody wants and corporate handouts.  With advertised SALT deductions, perhaps small cities in America would implement higher local taxes in order to stop their decay. Public amenities and infrastructure go a long way. 

So much this.  I take a beating on my taxes.  But I'm fortunate enough to make enough money to have this problem.  And while I obviously don't like paying taxes, I'm happy that I live in an area with good public schools, even though I don't have children and good public services in general.  I'm sick and tired of my money going to donor states who refuse to give their citizens decent education and healthcare, while bitching about coastal states' budgets and having their own Congress critters voting to get rid of the SALT deduction.  And I'm really  sick of most of my federal income tax dollars going to foreign misadventures and nonsense like border walls, while the federal government can't do the basics in protecting its citizens such as a Covid relief bill or providing infrastructure and funding for a vaccination program. 

[ChickenSandwich 9798]

On 1/30/2021 at 10:36 AM, PenelopeWitherspoon said:

You don’t live in a place that has had skyrocketing property values have you?

Does Austin count?

[PenelopeWitherspoon 19093]

On 1/30/2021 at 3:38 PM, Brew said:

I get that principle, I just don’t see where it matters federally. They are an independent taxing body that has to raise funds for federal initiatives in theory. Should you pay less federally on the same dollars because you live in a higher tax state? I’m not sure that makes sense although it could probably be supported by unequal federal subsidies to state. 

Really what they should do is cap SALT at a percentage of taxable income. You could cap it at something like 8-10% of income and limit those that make lifestyle choices that that generate a higher than normal property tax. 

They should also just cut the standard deduction completely and roll back rates slightly to offset. Throw in a capped rent deduction if you want home expenses equalized.

Except for SALT isn't just property tax.  For most of us, it is state and local income taxes as well (and in NYC, even more unemployement and medicare taxes).  The theory is if I am paying that at the state level, then there are services the feds are not having to spend more money for on my behalf, so I technically should pay less.  We can talk about how NY State and City are fucking inefficient and all sorts of shit like that in a separate thread, but why should MY hard earned dollars that the federal government confiscates from me under thread of fines and jail if I do no pay go to people in Mississippi and Alabama?

[elfenix 34171]

  The theory is if I am paying that at the state level, then there are services the feds are not having to spend more money for on my behalf, so I technically should pay less. 

Thatsnothowthisworks.gif

[dcar00 14035]

On 1/30/2021 at 10:48 AM, PenelopeWitherspoon said:

Unless they make social security income no taxable again for everyone, then I disagree. I’d be ok with no limit if as was deductible when paid, and taxed when received. Or, since that would be hard to switch to, not deductible when paid, but not taxed when received. Remember, the tax on SS income was supposed to be temporary. It’s not be repealed. So until they fix it, keep the fucking cap.

and herein lies the issue with govt.  the Income Tax was supposed to be temporary as well and was for a time until 1913.

[956 Worldwide 34443]

2 hours ago, PenelopeWitherspoon said:

but why should MY hard earned dollars that the federal government confiscates from me under thread of fines and jail if I do no pay go to people in Mississippi and Alabama?

Isn’t this kind of the point of having a federal government? You can devolve this rationale all the way down to the neighborhood level, “I want my taxes to go to MY kids’ school, not to those assholes across town.”

I’m not excusing Alabama or Mississippi, but if this is our take why did we even move past the idea of a confederacy.

 

[PenelopeWitherspoon 19093]

20 minutes ago, elfenix said:

 

 

Thatsnothowthisworks.gif

 

That is kind of how it is supposed to work.  The federal government was originally intended to be much more limited than it is.   

[PenelopeWitherspoon 19093]

1 minute ago, 956 Worldwide said:

Isn’t this kind of the point of having a federal government? You can devolve this rationale all the way down to the neighborhood level, “I want my taxes to go to MY kids’ school, not to those assholes across town.”

I’m not excusing Alabama or Mississippi, but if this is our take why did we even move past the idea of a confederacy.

 

Schools are different.  There has to be a federal standard.  If there isn't, it makes mobility within the country a lot more difficult.  I would like to see the federal government fund and support national accreditation bodies for all levels of K-12.  Everyone, public and private, has to be accreditated in order to operate.  It wouldn't just be standardized testing, which is a shit way to look at schools.  It would be curriculum, socio-economic factors, etc...

Funding for schools (K-12) SHOULD BE state and local, not federal.   

[956 Worldwide 34443]

2 minutes ago, PenelopeWitherspoon said:

Schools are different.  There has to be a federal standard.  If there isn't, it makes mobility within the country a lot more difficult.  I would like to see the federal government fund and support national accreditation bodies for all levels of K-12.  Everyone, public and private, has to be accreditated in order to operate.  It wouldn't just be standardized testing, which is a shit way to look at schools.  It would be curriculum, socio-economic factors, etc...

Funding for schools (K-12) SHOULD BE state and local, not federal.   

Schools are differently funded.  My point was you can hear a similar line of argument to the one that fed tax dollars shouldn’t go to Alabama or Mississippi....that tax dollars should “stay“ in a geographical region.We all want our dollars to stay close to home and that’s how Congress critters get elected but it shouldn’t be a principle.

There really was no time of ideal limited federal government, and the usefulness of federal investment to improve the nation has been understood since we gave it the power to build “post roads.” 

[FondrenRoad 4378]

2 hours ago, 956 Worldwide said:

Schools are differently funded.  My point was you can hear a similar line of argument to the one that fed tax dollars shouldn’t go to Alabama or Mississippi....that tax dollars should “stay“ in a geographical region.We all want our dollars to stay close to home and that’s how Congress critters get elected but it shouldn’t be a principle.

There really was no time of ideal limited federal government, and the usefulness of federal investment to improve the nation has been understood since we gave it the power to build “post roads.” 

The larger problem is that the federal government doesn't properly "invest" anywhere in America. It gives a ton of handouts to corporations, funds foreign wars, and does little more than that other than bail states out because they fail to plan for natural disasters. It needs to get back to building infrastructure and providing for the welfare of Americans. Since we don't have that and rely heavily on local and state funding, we should prioritize local and state tax revenue. 

If my tax money was actually doing something for the residents of MS and AL, I'd be okay with it being distributed in such a manner. But it doesn't do shit for them. Their state government doesn't do shit for them either. So I'd rather just fund my state until the residents of MS and AL finally wise up and vote for better governance. I'm tired of rebuilding your coastline after every hurricane because yall refuse to properly plan as well.